You must have observed some companies are growing without affecting their business costs and thought about how to save costs or how to reduce operating and IT costs in business? The answer to this question is very simple- OFFSHORING! Read here in detail about what is offshoring and how we can help.
Hitting IT profitability targets is no small feat, especially when delivering quality service in a competitive environment. As the cutthroat competition intensifies and the economic landscape evolves dramatically, budget cuts for most firms are inevitable in the pursuit of remaining lean, agile, and sustainable.
Cost reduction contributes to the increase in net income and offers opportunities to invest in new businesses, the creation of better products and services, and human resources.
One of today’s crucial business operations, expense management, is crucial because it is essential for adapting to the economic environment and market requirements. We can help you in reducing your IT expenses- Connect with us.
This blog discusses 17 simple yet effective IT cost-reduction methods. By these methods, you can reduce your IT expenses and cut their overhead costs while maintaining high service quality.
1. Establish a budget
The goal of reducing costs has no better start than generating a detailed budget that will be the backbone of the entire process. A good example of a budget can be used to detail costs, pinpoint which are needless, and manage other resources required for the completion of a specific project.
Initial steps are to conduct a financial audit, consider expected revenues and expenses, and establish concrete monetary objectives.
Budget planning and reporting of such plans periodically is an effective way of ensuring that a company is on the right course as far as the overall financial plan is concerned.
A budget can be created by dividing operation costs by types such as human resources, equipment, and accessories, permits and licences, publicity, and services. Mention the exact spending for every category depending on the company’s previous spending and the estimated spending for the following year.
Pro tip- Always keep emergency funds reserve in your budget.
2. Reduce unnecessary expenses
The decision as to what expenses are actually necessary for the successful operation of your business should be clearly defined, and anything that is not a definite operational necessity should be duly cut out from your budget.
This involves conducting an analysis of the expenses that you have so that you identify some of the things that necessitate spending that you could do without.
This might encompass subscriptions to services which you rarely require, large suppliers which make little sense, or software licences which you do not need to utilise ordinarily.
Evaluating expenses for redundancy means seeking similar services or subscriptions that may be offered and should be combined or eliminated. For instance, if you are using one business software and several project management tools, it may be wiser to use a single, multifunctional software.
It is important to pursue policies that would need additional authorisation to undertake activities which are not integral in carrying out the business.
3. Promote productivity among employees
Promoting efficiency among employees requires the development of an organisational culture that has clear goals, and feedback and celebrates achievements. Support employees to use applications that make their work more efficient and reduce stress.
Departments or teams must set smart objectives specifically for each employee and the group they belong to. Instead of relying on informal face-to-face interactions to review performance metrics, utilise performance management software to monitor progress and give constant feedback.
Promote the practice of reviewing operation progress and focusing on successes while reflecting on what mistakes were made and could be improved on.
How to do it?
Whether you have a remote team or an office team, dedicate some time to bond with your employees. Show them how company growth is related to their growth and distribution of profits.
4. Offshore
Offshore teams can be used in outsourcing certain functions in IT businesses, and it can turn out to be cheaper in the long run. This means that one is capable of getting personnel from the offshore service providers at an instance much cheaper than that of the local hires, yet quality is not being compromised.
Make sure you take your time and gather information from various sources so that you can make an informed decision. Prepare a list of criteria suitable for the assessment of the potential partners, with the emphasis placed on the type of activities they offer, the price, and whether the offshoring provider aligns with your company’s goals.
Ensure that communication is well coordinated and that project participants utilise one or more tools for collaboration. To address concerns around quality and time management, define goals on what you expect from your offshore workers and establish specific standards for these workers (Black Piano can help).
Pro tip- The same budget can get you better global talent when you offshore to India.
Read our blog on future offshoring trends and make your business ready for a digital and remote future.
5. Reduce meeting time
Your company can save money when meetings are reduced. For meetings to be worth the time there should be a clear agenda, identifying the right group members to include in the meeting, and keeping within time. Make an airtight schedule for every meeting that will take place and adhere to it.
Make sure that only those that need to be in the meeting are invited and attend. Most meetings do not need to be longer than 15 to 20 minutes. Another interesting idea is to have meetings standing. The discomfort of standing up for a long period shortens meeting times dramatically.
Here are some suggestions from LinkedIn, “Establish some ground rules and expectations for the meeting, such as respecting the time limit, staying on topic, listening actively, participating constructively, and avoiding distractions. You can also assign roles to different participants, such as facilitator, note-taker, timekeeper, or presenter. These roles can help the meeting run more smoothly and efficiently.”
6. Invest in technology
Explore and integrate various technical tools that can enhance operational activities by automating repetitive tasks, especially in the departments of accounting, human resources, and customer relations. Thus, software should be advanced and versatile while data and applications should be moved to the cloud, as cloud-based solutions automatically scale and are cheaper.
Pro Tip- Keep personal and professional communication platforms different. Use Slack and Trello, not WhatsApp to keep in touch with your teammates.
7. Determine productivity metrics
Actively monitor certain indexes such as the following:
- Time needed for project completion
- Employee productivity rate
- Level of client’s satisfaction
- Transparency
- Allocation of resources
Based on the above data, it will be possible to find out where problems exist to develop more efficient ways to increase employee productivity.
8. Replace unproductive staff
The cost of a company’s workforce is fast becoming a concern for any IT business (Offshoring could help!) Be sure to monitor employees’ performance and provide immediate feedback. That means that if the current workers are no longer producing desired results, they should be replaced by more effective personnel.
Performance reviews are necessary to sort out clear objectives and targets. Provide constructive feedback after training and spot the latest ideas for evaluation. It is important to look at these aspects of organisational culture for any signs of breakdowns in productivity that could arise from things such as inadequate training or unclear objectives and resolve them as soon as possible.
If an employee’s productivity is at an insufficient level and their manager provides the required training and motivation, then the question is whether the employee is suitable for the position.
Kindly note- Before you replace anyone, try to train them or give them warnings and make sure they are well informed about their role from day 1.
9. Utilise AI
AI brings operational effectiveness to the table especially for repetitive processes and pre-analysed data, as well as assists in improving customer experience through integrating chatbots. The use of AI is helpful because it minimises labour expenses, optimises outcomes, and enhances decision-making processes.
Be sure to analyse your business’ industry and think about what algorithms can bring the biggest changes in the work of your company. Some of the tasks which can be outsourced using AI include coding large sets of data, handling customer questions, or setting schedules. Identify and select AI tools and platforms that are relevant to your specific usage and are within your organisational capabilities.
Introduce artificial intelligence solutions step by step, especially if the company is going to start with small-scale tests. Manage the AI solutions used and constantly observe the results, whether positive or negative, to make alterations or seek improvements.
10. Ditch the office
Working from home has several benefits for IT businesses. Reducing overhead costs such as rent, utility bills and purchased office facilities is a massive win. Be sure to create work-from-home policies and create the right environment for your employees to thrive in. This may also lead to enhancing the satisfaction level of the employees and can lead to a reduction in turnover, which can have a positive impact on expenses.
Build your remote team with us- Black Piano. Take an estimate with our true cost employee calculator to see and understand how much you can save with a remote team from India.
11. Eliminate any unused software
Have you ever estimated your software bills? If not, then it’s time to do so. Expensive software licenses are a drain on the company budget. This not only ultimately cuts costs but also minimises the complexities related to your IT environment.
Organise the integration and coordination of the different software applications that are being used in the organisation to avoid duplication of the different software programs that are being utilised in the organisation to achieve its goals.
A list showing the software licences that have been deployed should be generated. Scan your subscriptions list and check for any software that you do not frequently use, and those that are no longer useful should be cancelled with immediate effect.
Seek inconsistencies and address them by centralising your tools: project management, communication, and file sharing, for instance. We recommend implementing a software management system to track usage and expenses to make certain that you will only be billed for what is right and reasonable.
12. Tax write-offs
Tax write-offs for a massive advantage for IT companies so be sure to use them effectively!
Several common tax deductions include office stationery, travelling expenses, and purchase of equipment. We recommend that you seek out the services of a tax expert to offer you the necessary legal advice to guide you on the best strategy to adopt to maximise your deductions while at the same time satisfying the prescribed legal requirements and standards.
You need to make sure that you maintain a record of every business expense you are likely to incur at any given time. Organise expenses and make sure every expense has an original receipt or a valid invoice within the organisation.
Consult with a tax specialist to determine all possible deductions and credits, including but not limited to the research and development activities credits, home office deduction, and qualified employee place benefit.
13. Reduce print marketing, go digital
It is 2024… If you’re not implementing digital marketing, you’re behind.
Implementing digital marketing within your IT marketing strategy can be beneficial in eradicating or reducing the cost of print marketing.
Your digital marketing strategy may involve the use of tools such as email marketing, social media marketing, and content marketing, which are cheaper to implement and provide greater targeting and reporting. Digital marketing requires less capital compared to traditional marketing since all your plans are available to a larger audience.
Be sure to create an integrated communication strategy that will be built around digital marketing. Just like with any marketing efforts, incorporate data monitoring and analysis of the success of campaigns to inform further tactics and strategies.
Finally, companies should train their employees on the latest marketing techniques and guidance. This knowledge should be passed between employees for open and clear marketing communication.
As per Deloitte, “Both mid-size and large enterprise leaders surveyed think the biggest growth drivers for the tech industry over the next 12 months will come from artificial intelligence and cloud.”
14. Free cloud storage solutions
Cloud storage service providers offer solutions that may be available for free or at a relatively low cost, which can drastically decrease your costs related to data storage in your IT business. Numerous data plans are more than enough to serve the smaller to average-size businesses, this eliminates the need for businesses to invest in expensive on-site systems.
Another advantage of cloud storage is that it offers elasticity as your business expands or fluctuates, thus reducing recurring maintenance charges.
Even Google has emphasised on why all businesses should opt for cloud storage rather than traditional storage methods. As per Google, “Cloud Storage enables organizations to store, access, and maintain data so that they do not need to own and operate their own data centres, moving expenses from a capital expenditure model to operational.”
15. Negotiate with IT suppliers
Cost savings can be realised through contracting strategies with IT suppliers. Ensure you revise your contracts every year and engage your suppliers to negotiate better deals or lower rates. Another advantage of developing good working relationships with your suppliers is that it has the potential to generate more opportunities to cut costs with your supplier.
The most comprehensive review would be to go through every existing contract between your company and suppliers to find possibilities for subsequent negotiation.
Read here why you should offshore your IT requirements and services to India.
16. Reduce turnover
Maintaining low employee turnover is advantageous to any IT business. Not only are employees happier, more work gets done, but the firm saves money on recruitment. The consequences of high turnover include higher costs associated with recruitment, training, and integrating new talent. Thus, avoiding high turnover is necessary for running a successful IT business.
17. Outsource software development
Offshore software development is extremely useful as it is cheaper and easier to source professional personnel without having to employ them permanently. When working with external developers or engineers, you end up saving money and time (Black Piano can find the right engineers for your team)
Determine specific requirements and investigate potential vendors. To that end, one should consider the expertise of any potential partners. Not only should your talent partner have a track record of recruiting extraordinary talent, but it should also be able to show the longevity of its talent within various companies.
Why Black Piano?
Thinking why India, why not any other country? Read our detailed analysis on why India to get assurance how India can maximise your business profits.
Black Piano is more than just a recruiter or EoR, we are the best talent partner that money can buy. You read that correctly… Don’t be shy, let’s have a call about your business’ talent needs with Jon.
